Many households are facing a perfect storm of pressures on their finances as the government’s furlough scheme comes to an end.
The end of the government's furlough scheme on 1 October will leave thousands of households facing the biggest squeeze on their finances in years.
It comes amid a dramatic rise in energy prices, high inflation and the imminent withdrawal of other pandemic support, such as the self-employment support scheme. Some of the 1.6 million workers who are still on furlough could lose their jobs.
The Bank of England has said the slow pace of people coming off the scheme and the record number of vacancies makes the job market difficult to read.
Meanwhile, the energy price cap is also rising from this weekend, increasing by £139 to £1,277. It follows a shocking global shortage of gas which has seen wholesale prices double in the past two months and several energy firms collapse.
Experts warn that gas prices are likely to remain exceptionally high until next summer - as the energy price cap could actually rise by a further £280 when it is reviewed in April 2022 - before returning to normal in 2023.
- Five things investors must know about Britain’s energy crisis
- Six things you must do before buying any share
- Check out our award-winning stocks and shares ISA
On top of this, inflation reached 3.2% in August - the largest rise on record - which only served to emphasise soaring living costs. Workers are also facing a range of tax increases to help overhaul social care and NHS backlogs.
As a result, many Brits could find themselves struggling financially and getting into debt just to get by. Stretching income and pulling as much as possible from any extra sources will be key to balancing the books for many.
What can I do?
The usual advice about cutting down on non-essential spending applies - as does shovelling whatever savings you can.
Do not hesitate to talk to your energy provider if you’re struggling. Providers offer payment breaks or reductions on a case-by-case basis. Anyone already struggling amid the current energy crisis must be supported.
For example, Octopus Energy, which will take over Avro Energy customers, must ensure any debt repayment plans in place for those customers are respected.
If you don’t qualify for benefits such as Winter Fuel Payments, Cold Weather Payments or the Warm Home Discount scheme, there are grants from charitable trusts if you are in debt to your energy supplier. Scottish Power Hardship Fund and E.on Energy Fund offer grants to their customers. Also, you don’t have to be a customer to ask for help from the British Gas Energy Trust.
- Pensions jargon buster
- Don't be shy, ask ii…am I saving enough for a decent retirement?
- ii Top Ten: things to keep in mind when managing your own SIPP
Damage control that we know we can do ourselves includes wearing extra layers, lowering thermostats and not leaving electrical appliances on standby.
Turning the heating down by just one degree can save you £55 a year on your energy bill, according to the Energy Saving Trust, while switching appliances off by the plug can save you £24 a year according to British Gas. Boiling only as much water as you need for your cuppa will also save you money.
Meanwhile, reinventing your laundry habits can save you £100 a year, according to Which?
Remember to apply for the working from home tax relief which will give you something towards bills. A basic-rate taxpayer gets an extra £62.40 while a higher rate taxpayer will get £125.
It takes just a few minutes to claim via the government website and you only need a Gateway user ID and password which you can create when you apply.
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.